Dauphin County, state representatives and Mayor Linda Thompson’s office said they had to hire outside counsel to fight City Council’s petition, claiming the council’s action was illegal and not in the best interest of taxpayers. Outside lawyers were hired, they said, because their in-house attorneys don’t have municipal bankruptcy expertise.

City Councilman Brad Koplinski said the lawyer costs are worth it because the state illegally took over Harrisburg and changed a law specifically to prevent the city from filing for bankruptcy protection. Only through bankruptcy can the city negotiate a fair fiscal recovery agreement with its debtors, he said.

“Yes, it’s a lot of money. We’re going to have to talk to Mr. Schwartz about [lowering] it,” Koplinski said. “But I know he worked more than 300 hours, and we are fighting for the city.”

Thompson’s side rang up $30,000 in lawyer bills; Dauphin County has been billed $75,438 by special counsel it hired to contest City Council’s municipal bankruptcy petition, and the commonwealth has been charged $184,000 by attorneys it hired to block the bankruptcy petition.

Thompson hired the Tucker Arensberg law firm to fight the bankruptcy filing because it put the city in harm's way, said Robert Philbin, the mayor’s spokesman. When city vendors found out City Council filed a petition for bankruptcy, they were ready to stop supplying the city with goods and services it needs to operate, he said.

“The ramifications and stigma of bankruptcy permeated the financial environment around the city from Wall Street to people delivering toilet paper,” Philbin said. “The mayor had to respond. These kinds of moves risk the health and safety of the citizens of the city.”

Harrisburg’s law bureau has one solicitor who is overworked and overstressed, Philbin said. That is why the city has hired about eight law firms to work on various lawsuits filed against the city and hired outside counsel to deal with the bankruptcy petition, he said.

Tucker Arensberg has billed the city $30,000 for its services to date.

The commonwealth’s special counsel, Cozen O’Conner, submitted a $184,000 bill for 481 hours of work since Sept. 26.

Kratz said he could not separate Cozen O’Conner’s invoices to specify how much of its billing to date was generated by the bankruptcy petition, but Cozen O’Conner billed taxpayers about $383 per hour.

It is more cost effective for the state to hire outside counsel than it is to retain full-time lawyers specializing in municipal bankruptcy law, Kratz said.

“The use of outside counsel in this instance is warranted,” he said.

Federal Bankruptcy Judge Mary France dismissed the City Council’s bankruptcy filing on Nov. 23, saying state law prohibited Harrisburg from filing its petition, as did the lack of support for the filing from Thompson.

France then denied an appeal of her ruling filed by City Council, which is now appealing her decision to the next level.

The county hired McNees, Wallace & Nurick law firm as its special counsel to deal with the fight.

Like the state, the county does not have attorneys on staff with municipal bankruptcy expertise, which is why the commissioners hired special counsel to fight the bankruptcy petition, said Amy Richards Harinath, spokeswoman for the commissioners. McNees, Wallace & Knurick is billing the county at $250 per hour.

Council President Wanda R.D. Williams said the board is processing a $20,000 payment to put toward Schwartz’s bill and is going to pay him an additional $20,000 by March. That is the most the city can afford to pay Schwartz, Williams said.

The council looks forward to working with Unkovic, Williams said, but it has to have bankruptcy as an option of last resort, she said.

Unkovic is drafting a fiscal recovery plan he must deliver to the state and city by Feb. 6.

He is aware of the invoice Schwartz submitted to the city and is reviewing it, but will not comment further, Kratz said.

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